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2020 (3) TMI 1459 - AT - Income TaxAllowability of Periphery Development Expenses - CSR expenditure incurred by assessee voluntarily prior to asst. year 2015-16 - whether allowable business expenses - HELD THAT:- We note that the Periphery Development Expenses was nothing but a Corporate Social Responsibility (CSR) of the company which was carrying out the business of mining in Joda, Odisha. As Counsel submitted that it was mandatory for the mining industry to look after the development of the area in which the mines were operating and to create employment opportunities, providing educational facilities to the children etc. The expenses incurred by the assessee were on welfare schemes only which are for malaria eradication, distribution of mosquito nets, construction of mandaps etc. Therefore, these expenses were wholly and exclusively for the business purpose. We are of the view that the CSR expenditure incurred prior to asst. Year 2015- 16 are allowable business expenditure as the same are wholly and exclusively incurred for the purpose of business. The explanation to section 37 of the Act restricting the allowance of CSR expenditure is prospective in nature and has no application prior to asst. Year 2015-16. For that we rely on the judgment of the co-ordinate Bench of ITAT Raipur in the case of ACIT, Circle 1(1), Bilaspur v. Jindal Power Ltd. [2016 (7) TMI 203 - ITAT RAIPUR] held Periphery Development Expenses, if incurred have to be taken as a business expenditure. The maximum that was to be explained as per the ld. Assessing Officer was 5%. He has sort of accused the assessee for spending more that 5%. This stand of the ld. Assessing Officer cannot be accepted inasmuch as how much the assessee spends legitimately is the decision of the assessee. The Revenue cannot question this expenditure as per the decision of the Apex Court in [2006 (12) TMI 82 - SUPREME COURT]. Decided against revenue.
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